Entergy 2007 Annual Report Download - page 41

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Entergy Corporation and Subsidiaries 2007
CA S H FL O W ACTIVITY
As shown in Entergy’s Statements of Cash Flows, cash ows for the
years ended December 31, 2007, 2006, and 2005 were as follows
(in millions):
2007 2006 2005
Cash and Cash Equivalents at
Beginning of Period $ 1,016 $ 583 $ 620
Eect of reconsolidating
Entergy New Orleans in 2007 17 – –
Eect of deconsolidating
Entergy New Orleans in 2005 – – (8)
Cash ow provided by (used in):
Operating activities 2,560 3,448 1,468
Investing activities (2,098) (1,928) (1,992)
Financing activities (222) (1,084) 496
Eect of exchange rates on cash
and cash equivalents – (3) (1)
Net increase (decrease) in cash
and cash equivalents 240 433 (29)
Cash and Cash Equivalents at
End of Period $ 1,273 $ 1,016 $ 583
Operating Cash Flow Activity
2007 Compared to 2006
Entergy’s cash ow provided by operating activities decreased by $888
million in 2007 compared to 2006. Following are cash ows from
operating activities by segment:
n฀ ฀Utility provided $1,809 million in cash from operating activities
in 2007 compared to providing $2,592 million in 2006, primarily
due to decreased collection of fuel costs, the catch-up in receivable
collections in 2006 due to delays caused by the hurricanes in
2005, and the receipt of an income tax refund in 2006 compared
to income tax payments being made in 2007, partially oset by
the receipt of $181 million of Community Development Block
Grant funds by Entergy New Orleans in 2007, signicant storm
restoration spending in 2006, and a decrease of $118 million in the
amount of pension funding payments in 2007.
n฀ ฀Non-Utility Nuclear provided $880 million in cash from operating
activities in 2007 compared to providing $833 million in 2006. e
increase is due to the cash ows attributable to higher net revenue,
oset by the receipt of income tax refunds in 2006, compared to
income tax payments being made in 2007, and spending associated
with four refueling outages in 2007 compared to two in 2006.
n฀ ฀Parent & Other used $87 million in cash in operating activities in
2007 compared to providing $116 million in 2006, primarily due
to the receipt of $96 million in dividends from Entergy-Koch in
2006 and an increase in interest payments in 2007 by
Entergy Corporation.
2006 Compared to 2005
Entergy’s cash ow provided by operating activities increased by
$1,980 million in 2006 compared to 2005 primarily due to the
following activity:
n฀ Utility provided $2,592 million in cash from operating activities
in 2006 compared to providing $964 million in 2005 primarily
due to increased recovery of fuel costs, the receipt of an income
tax refund (discussed below), a decrease in storm restoration
spending, and the eect in 2005 of a $90 million refund paid to
customers in Louisiana, partially oset by an increase of $136
million in pension funding payments.
n฀ Non-Utility Nuclear provided $833 million in cash from operating
activities in 2006 compared to providing $551 million in 2005
primarily due to an increase in net revenue and the receipt of an
income tax refund (discussed below).
Entergy Corporation received a $344 million income tax refund
(including $71 million attributable to Entergy New Orleans) as a
result of net operating loss carryback provisions contained in the Gulf
Opportunity Zone Act of 2005. e Gulf Opportunity Zone Act was
enacted in December 2005. e Act contains provisions that allow a
public utility incurring a net operating loss as a result of Hurricane
Katrina to carry back the casualty loss portion of the net operating
loss ten years to oset previously taxed income. e Act also allows a
ve-year carry back of the portion of the net operating loss attributable
to Hurricane Katrina repairs expense and rst year depreciation
deductions, including 50% bonus depreciation, on Hurricane Katrina
capital expenditures. In accordance with Entergy’s intercompany tax
allocation agreement, $273 million of the refund was distributed to
the Utility (including Entergy New Orleans) in April 2006, with the
remainder distributed primarily to Non-Utility Nuclear.
Investing Activities
2007 Compared to 2006
Net cash used in investing activities increased by $170 million in 2007
compared to 2006. The following activity is notable in comparing
2007 to 2006:
n฀ ฀Construction expenditures were $55 million lower in 2007 than
in 2006, primarily due to a decrease of $44 million in Non-Utility
Nuclear spending.
n฀ ฀In 2006, Entergy received proceeds from the sale of the retail
electric portion of the Competitive Retail Services business
operating in the ERCOT region of Texas and the sale of the non-
nuclear wholesale asset business’ remaining interest in a power
development project.
n฀ ฀Non-Utility Nuclear purchased the Palisades power plant in
April 2007.
n฀ ฀Entergy Mississippi purchased the Attala power plant in
January 2006.
n฀ ฀Insurance proceeds received increased by $64 million in 2007
because of payments received on Hurricane Katrina and Hurricane
Rita claims.
2006 Compared to 2005
Net cash used in investing activities decreased slightly in 2006
compared to 2005 and was aected by the following activity:
n฀ e proceeds from the sale of the retail electric portion of the
Competitive Retail Services business operating in the ERCOT
region of Texas and the sale of the non-nuclear wholesale asset
business’ remaining interest in a power development project.
n฀ Entergy Mississippi purchased the Attala power plant in January
2006 and Entergy Louisiana purchased the Perryville power plant
in June 2005.
n฀ Liquidation of other temporary investments net of purchases
provided $188 million in 2005. Entergy had no activity in other
temporary investments in 2006.
n฀ e Utility used $390 million in 2005 for other regulatory
investments as a result of fuel cost under-recovery. See Note 1 to
the nancial statements for discussion of the accounting treatment
of these fuel cost under-recoveries.
Management’s Financial Discussion and Analysis conti nued